The Court’s decision Wednesday in Wos v. E.M.A. (formerly known as Delia v. E.M.A.) confirmed the Court’s previous vigor in protecting the rights of Medicaid claimants from states hoping to close budget shortfalls by taking an excessive share of the tort recoveries their claimants obtain in litigation.

The case involves the common fact setting in which a state first funds medical expenses under Medicaid and then the claimant subsequently recovers a settlement for the injury in private tort litigation. In this case, for example, a child received a multi-million-dollar settlement in tort litigation against physicians for injuries sustained at the time of her birth. Federal law permits (indeed obligates) the state to take out of any such settlement the funds attributable to the expenses previously paid under Medicaid, but prohibits the state from taking funds attributable to other injuries or expenses.

In response to those provisions (and an earlier Supreme Court decision interpreting them, Arkansas Dep’t of Health & Human Services v. Ahlborn), North Carolina adopted a statute that creates a lien on any tort recovery equal to a fixed amount of one-third of the tort recovery (capped, of course, at the state’s total claim). Although that arrangement doubtless saves on administrative costs, its weakness comes in a case in which medical expenses are less than one third of the claimant’s total injury – in which case a recovery by the state of one-third of the tort settlement would give the state an inappropriately large share of the settlement. The child and her guardian justifiably claim this is such a case, because birth-related injuries have caused the child life-long pain and suffering and quality-of-life injuries that seem to dwarf the medical expenses reimbursed by Medicaid. The Fourth Circuit concluded that the North Carolina statute was preempted because it impermissibly took a share of the recovery that was not related to medical expenses.

Writing for a majority of six, Justice Kennedy affirmed the Fourth Circuit’s conclusion. Much of the opinion broadly proclaims that the federal statute sets both a “floor” and a “ceiling” for what the state can take from Medicaid claimants: the state must take the share of any tort recoveries attributable to Medicaid-paid expenses, but it is forbidden to take any more. Because this statute takes one-third of all recoveries, it takes more in any case in which the reimbursed expenses are less than one-third of the total injuries.

The state’s claims of administrative convenience were dismissed out of hand; presumably one reason they carried so little weight was the poor facts of the case the state chose to litigate in the Supreme Court – one in which a “fair” share (if there is such a thing) doubtless would have been far less than ten percent of the recovery. Another telling fact against the state’s claims of administrative necessity is the presence in a third of the states of more flexible procedures that permit hearings to establish the appropriate share of recovery. Against that factual setting and backdrop of administrative practice, the state’s procedures look unnecessarily harsh, not to say greedy.

To be sure, the closing pages of the opinion leave open the possibility that the Court might approve procedures that give the state more flexibility: a rebuttable presumption that a particular percentage is appropriate, or perhaps even an administratively determined percentage based on an evidentiary record of typical shares of recoveries. By the end, then, it seems that pretty much the only thing the Court is sure to condemn is a process that sets an arbitrarily high percentage, with no evidence to justify it, and makes that percentage conclusive.

One other note of jurisprudential interest involves the Justices’ continuing dance around the legal relevance of agency positions taken only in the course of appellate litigation. Here, Justice Breyer, in a concurrence speaking only for himself, explains that his decision in the case does depend on the agency’s position that North Carolina’s statute is preempted. He acknowledges that the agency’s view would not qualify for deference under Chevron, Skidmore, Beth Israel, or Seminole Rock, but quoting Justice Frankfurter finds it relevant in his view.

Plain English Summary: North Carolina wanted to take one-third of all the money Medicaid claimants get in suits against doctors and hospitals. The Supreme Court rejected North Carolina’s fixed rule. The Justices told North Carolina to set up a process that decides in each case how much of the money is for medical expenses (which the state gets) and how much is for other things like pain and suffering (which the claimant gets to keep).

Merits Case Pages and Archives

The court issued additional orders from the December 2 conference on Monday. The court did not grant any new cases or call for the views of the solicitor general in any cases. On Tuesday, the court released its opinions in three cases. The court also heard oral arguments on Monday, Tuesday and Wednesday. The calendar for the December sitting is available on the court's website. On Friday the justices met for their December 9 conference; Honeycutt v. United States.

Major Cases

Gloucester County School Board v. G.G.(1) Whether courts should extend deference to an unpublished agency letter that, among other things, does not carry the force of law and was adopted in the context of the very dispute in which deference is sought; and (2) whether, with or without deference to the agency, the Department of Education's specific interpretation of Title IX and 34 C.F.R. § 106.33, which provides that a funding recipient providing sex-separated facilities must “generally treat transgender students consistent with their gender identity,” should be given effect.

Bank of America Corp. v. City of Miami(1) Whether, by limiting suit to “aggrieved person[s],” Congress required that a Fair Housing Act plaintiff plead more than just Article III injury-in-fact; and (2) whether proximate cause requires more than just the possibility that a defendant could have foreseen that the remote plaintiff might ultimately lose money through some theoretical chain of contingencies.

Moore v. Texas(1) Whether it violates the Eighth Amendment and this Court’s decisions in Hall v. Florida and Atkins v. Virginia to prohibit the use of current medical standards on intellectual disability, and require the use of outdated medical standards, in determining whether an individual may be executed.

Pena-Rodriguez v. ColoradoWhether a no-impeachment rule constitutionally may bar evidence of racial bias offered to prove a violation of the Sixth Amendment right to an impartial jury.

Conference of December 9, 2016

FTS USA, LLC v. Monroe (1) Whether the Fair Labor Standards Act and the Due Process Clause permit a collective action to be certified and tried to verdict based on testimony from a small subset of the putative plaintiffs, without either any statistical or other similarly reliable showing that the experiences of those who testified are typical and can reliably be extrapolated to the entire class, or a jury finding that the testifying witnesses are representative of the absent plaintiffs; and (2) whether the procedure for determining damages upheld by the Sixth Circuit, in which the district court unilaterally determined damages without any jury finding, violates the Seventh Amendment.

Overton v. United States Whether, consistent with this Court's Brady v. Maryland jurisprudence, a court may require a defendant to demonstrate that suppressed evidence “would have led the jury to doubt virtually everything” about the government's case in order to establish that the evidence is material.

Turner v. United States (1) Whether, under Brady v. Maryland, courts may consider information that arises after trial in determining the materiality of suppressed evidence; and (2) whether, in a case where no physical evidence inculpated petitioners, the prosecution's suppression of information that included the identification of a plausible alternative perpetrator violated petitioners' due process rights under Brady.